Titan Industries Ltd (“Titan”) offers a broad range of products that span several industries. These include the horological, gold jewellery, eyewear and precision engineering instruments. This broad range of products offers diversification of revenue for the firm, which benefits the top line and offers scope of growth in many of these industries. Titan has often pioneered the way for innovative methods of marketing and positioning a product in crowded industries and has broken new ground by fundamentally changing the way a particular industry functions. As of now, the major revenue drivers for Titan are the horological and gold jewellery industries. Any effects on these industries will impact the company greatly.
The company is now looking to break into the international market and some forays into the international market has been successful, whereas others have not which resulted in Titan writing off its operations as losses. It has however continued to grow handsomely in the Indian market space, taking advantage of increased consumer power due to economic expansion of the country, and it has been able to improve brand recognition due to innovative measures in connecting with the Indian population. This success has made Titan a market leader in most of the markets it has chosen to enter and has been duly rewarded with awards for Brand recognition and trust as well as innovative methods of marketing in the past year.
This report shall now look into the major industries Titan operates in. They are namely the watch industry and the gold jewellery industry.
(A) HOROLOGICAL INDUSTRY TRENDS:
The Global watch industry did not grow in terms of volumes of sales (it remained at 1.05 billion units worldwide). The reasons for this are the economic deceleration in most developed markets such as Europe and Japan. Asia posted a large growth in units sold whereas the US showed a slight recovery from previous trends, owing to greater economic optimism in that country. The industry can be broken down into four categories:
(i) Mass Market
(ii) Mid-market brands
(iii) Premium brands
(iv) Luxury brands
Globally, Swiss watches (which primarily consists of luxury and premium) showed a large increase in sales, which was driven primarily by a large increase in Asian consumption (30%). This increase accounted for 55% of all exports of Swiss watches. A key concern for the industry is represented by exchange rate risk, as the Swiss franc is now pegged to the Euro (which may have been a contributing factor to increases in sales by Asian consumers as well). Sales of mechanized watches have overwhelmed the sales of other types of watches (digital and quartz) that have remained flat. The Indian watch market is bifurcated into two types, namely the organized and unorganized sector. The market itself is weighted towards the unorganized sector, which primarily targets low-end customers and sells about 30 million units per year. This volume consists of very cheap products that are assembled by hand by smalltime players but also of spurious and stolen products. The organized sector is dominated by a few brands such as Titan, Timex and HMT, of which Titan has a majority market share (65%). Global players are also entering the Indian market with strong brands to back them, in order to take advantage of the burgeoning consumer class in the country. Thus differentiation, value, brand and/or price competition appear to be the future trends in this space. Also as market penetration is rather low (at around 27%), the industry feels that there is scope for growth here. The industry is capital intensive and
(B) GOLD JEWELLERY INDUSTRY TRENDS:
The Gold Jewellery industry can be broadly broken into two segments, namely the gems and precious stones segment and gold jewellery segment. India has been in the forefront when it comes to this...